Beyond the Bottom Line

What society expects from business is evolving rapidly. Beyond providing returns to shareholders, businesses play a critical systemic role in the development of society and guardianship of the global environment. For many, this is uncharted territory. Success will come only if we continue to discuss and debate some of the most pressing questions, such as what is the purpose of business? Do investors hold the key to a sustainable future? And what does it mean to have purpose that goes beyond the boardroom?

We must chip away together at seemingly difficult trade-offs until their complexities unravel and solutions begin to emerge. It is in this spirit that we ask businesses, organisations, and policymakers: are you ready to think Beyond the Bottom Line?

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Why are so many firms insisting on telling us what their ‘purpose’ is? David Jevons, Oxera Partner, has been looking at the role of business in today’s society and discusses the purpose of a corporate purpose.
Since the 1970s, introductory economics and finance classes have taught that the purpose of a firm is to maximise shareholder wealth; yet today, some of the most successful and high-profile firms are keen to communicate a different purpose.

What should be the purpose of a firm? To maximise profits or shareholder value, or to pursue wider societal objectives? Professor Julian Franks of London Business School, and Oxera Partner, discusses the roles of trust and implicit contracts in redefining corporate purpose. He looks at changes that may be required in regulated utilities, with a focus on water

Society is playing a growing role in shaping the way that businesses operate. Reflecting this, have become platforms to highlight good and bad business practice and help people coordinate responses. To what extent does this pressure influence core business operations? —and therefore the future of business? Tim Hogg, a behavioural economist at Oxera, takes a look at the role of social media in the context of thinking Beyond the Bottom Line.

In the digital services market, platform operators compete for the attention of consumers. However, there are increasing concerns about their degree of market power, which can be difficult to assess using the traditional tools of competition and regulation. As calls for further regulation increase, authorities must ensure that their interventions do not lead to unintended consequences, such as reducing the gains that such platforms bring to society

Regulators are increasingly looking to firms to ensure that their practices are ‘fair’ in terms of the process followed (e.g. the type of data used) and the outcomes delivered (e.g. which consumers pay more). So, how can boards and senior managers satisfy themselves that practices are indeed fair and in line with their firm’s principles and risk appetite? We present Oxera’s practical framework, which has been used as a tool by senior decision-makers in financial services firms

Fairness is emerging as an increasingly important policy goal across sectors. We set out a framework for assessing fairness concerns, and examine the relationship between the aims of competition policy and fairness in current debates. Do the European Commission’s platform-to-business initiative and reputation systems for sharing platforms lead to fairer processes? And do online price differentiation and negotiations between platforms and content creators lead to fair outcomes? What is the role of competition in all of this?

With an ever-increasing array of products, services and bundles available in the telecommunications market, and in a world in which consumers have limited computational power, it is not a straightforward task to discern the best option. Does this complexity cause consumer harm, and should regulators do anything about it?

In most countries, financial conduct regulation and competition regulation are undertaken by separate institutions. Yet there are questions about the efficacy of this arrangement, given the results seen in UK financial markets, which can sometimes favour neither consumers nor efficient and innovative firms.

Businesses increasingly use consumer data to offer better and more targeted digital products and services. Many of these new business models rely on data to facilitate transactions and generate revenues in a way that was not previously possible. Access to personal data has understandably raised concerns about privacy. Based on a study commissioned by Which?, we investigate the delicate balance between privacy and the value of digital services

Yesterday, the FCA published the terms of reference for the forthcoming general insurance market study; a thematic review of the home insurance supervisory programme; and a discussion paper on fair pricing in financial services.
Who is affected?
The market study will...

The Rail Review launched on 20 September is (at least) the fifth major rail review in eight years. But how can passenger and freight customer interest genuinely be placed at the heart of rail in Great Britain? One approach...

Today Citizens Advice issued a super-complaint to the Competition and Markets Authority about the ‘loyalty penalty’.
According to Citizens Advice, firms are ‘routinely punishing their customers simply for being loyal’, which disproportionately affects vulnerable customers such as older people.
Who is...

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